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Forms Of Business Organization

Forms Of Business Organization

Alzayat law firm provides services to new and existing businesses by acting as a company formation/incorporation agent. Our law firm provides company formation services as part of the general services of assisting foreign individuals and other business entities to set up their legal presence. Our specialist knowledge and vast experience enable us to provide fast and efficient company formation services. We can incorporate a company limited by shares company limited by guarantee and register a foreign company in Egypt.

A business can be organized in one of several ways, and the form its owners choose, will affect the company's and owners' legal liability and income tax treatment. Here are the most common options and their major defining characteristics.

Joint Stock Company

A business entity which is owned by shareholders. Each shareholder owns the portion of the company in proportion to his or her ownership of the company's shares (certificates of ownership). This allows for the unequal ownership of a business with some shareholder owning a larger proportion of a company than others. Shareholder are able to transfer their shares to others without any effects of the continued existence of the company.

Sole Proprietorship

The default option is to be a sole proprietor. With this option there are fewer forms to file them with other business organizations. The business is structured in such a manner that legal documents are not required to determine how profit-sharing from business operations will be allocated.

This structure is acceptable if you are the business's sole owner and you do not need to distinguish the business for yourself. Being a sole proprietor does not preclude you from using a business name that is different from your own name. however, In a sole proprietorship all profits, losses, assets and liabilities are the direct and sole responsibility of the owner. Also, the sole proprietor will pay self-employment tax on his or her income.

If the risks in your line of work are not very high, a good business insurance policy can provide protection and peace of mind while allowing you to remain a sole proprietor. One of the biggest advantages of a sole proprietorship is the ease with which business decisions can be made. 

LLC - limited liability company

This business structure protects the owner's personal assets from financial liability and provides some protection against personal liability. There are situations where an LLC owner can still be held personally responsible, such as if he intentionally does something fraudulent, reckless or illegal, or if she fails to adequately separate the activities of the LLC from her personal affairs.

According to the Egyptian law it does not allow banks, insurance companies or nonprofit organizations to be LLCs.

LLP - limited liabilities partnership

Is a partnership in which some or all partners have limited liabilities, a partnership is a structure appropriate to use if you are not going to be the sole owner of your new business.

In a general partnership, all partners are personally liable for business debts, any partner can be held totally responsible for the business and any partner can make decisions that affect the whole business. 

In a limited partnership, one partner is responsible for decision-making and can be held personally liable for business debts. The other partner merely invests in the business. Although the general structure of limited partnerships can vary, each individual is liable only to the extent of their invested capital. 

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